TFSA: Invest $100,000 and Get $1 Million + $642/Month in Passive Income

Here’s how you can multiply your TFSA cash by investing in quality dividend stocks and earn monthly passive income.

| More on:
IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT

Image source: Getty Images

If you have been contributing money to your Tax-Free Savings Account (TFSA) for several years, you should consider investing in some fundamentally strong stocks to grow your hard-earned savings in the long run. Besides the returns you’ll get with appreciation in the share prices of the stock you pick, you can also expect to earn reliable monthly passive income by investing in dividend stocks.

In this article, I’ll talk about an amazing dividend stock TFSA investors can buy right now to make a fortune in the long term.

The best dividend stock for TFSA investors

One of the biggest advantages of dividend investing using your TFSA savings is that you don’t need to worry about paying taxes on the returns or the passive income you generate. But to minimize your risks, you should always invest in stocks from an industry with huge growth potential. And it’s always a good idea to avoid investing in companies with a very complex business model that you don’t understand easily.

Considering all these factors, Sienna Senior Living (TSX:SIA) could be a great dividend stock for TFSA investors. This Markham-headquartered company distributes its dividend payouts every month and currently has a market cap of about $882.1 million. Its stock trades at $12.15 per share with 19.2% year-to-date losses. At this price, the stock offers a solid 7.7% annual dividend yield. Now, let me explain why I find Sienna stock really attractive for TFSA investors.

Key reasons to buy this dividend stock now

Sienna Senior Living has a very easy-to-understand business model, as it primarily focuses on providing a variety of living options like assisted living, independent living, and long-term care to seniors in Canada. The firm generates revenue by operating 80 seniors’ living residences, including retirement residences and long-term-care communities, in British Columbia, Ontario, and Saskatchewan. Besides that, it also manages 13 third-party residences.

Based on the 2021 census, the Canadian seniors’ population in the 85-plus age group is likely to triple in the next 25 years, which should significantly boost the demand for Sienna’s services and its financial growth in the long term. Despite its consistently improving fundamentals with increasing occupancy rates at its properties this year, the recent broader market pullback has driven this dividend stock sharply lower. However, the ongoing temporary macroeconomic challenges shouldn’t have any major impact on the company’s long-term growth outlook. That’s why I find Sienna stock highly undervalued right now to buy and hold for at least the next two decades.

Bottom line

Given the expected sharp demand growth for Sienna’s services, its stock has the potential to deliver solid 10-fold returns over the next two decades. It simply means if you invest $100,000 in Sienna stock now from your TFSA, your invested money could grow to $1 million in about 20 years. With this investment, you can also expect to receive $642 in monthly passive income from its dividends, which is equivalent to more than $7,700 per year. While this example should give you a good idea of how dividend investing can help your TFSA cash grow fast in the long run, you must consider diversifying your portfolio instead of pouring in a big pile of cash in a single stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Dividend Stocks

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »

Payday ringed on a calendar
Dividend Stocks

This 6% Dividend Stock Pays Cash Every Month

Can a 6% dividend yield help you build a monthly retirement income? An investment made right can help you build…

Read more »

Payday ringed on a calendar
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

These three monthly-paying dividend stocks can help you earn a monthly passive income of $1,000.

Read more »

Dividend Stocks

3 Dividend Stocks to Double Up on Right Now

Some of these dividend stocks will take longer to recover than others, but they'll certainly pay you to stick around.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: How Much to Invest to Earn $250/Month

Want to earn $250/month of tax-free passive income? Here are four Canadian dividend stocks to look at buying in your…

Read more »